on-inducing events (like the financial crisis), but the rush of legislation it passed, often in difficult circumstances, is testament to Reid and Pelosi's desire and ability to use the majorities they were given. And they did. From health-care reform to financial regulation to food safety to the tax deal to tobacco regulation to the stimulus, the laws they wrote will reshape the safety net, the regulatory state, tax policy, the country's built infrastructure, and much more.

The question now becomes how the 112th Congress will work. The House GOP has already released its rules. They include "CutGo," wherein tax cuts will no longer need to be paid for, a live reading of the Constitution on the House floor, barring former congressmen who now work as lobbyists from the House gym, posting the text of legislation at least 24 hours before it gets considered, and changing the "Committee on Education and Labor" to the "Committee on Education and the Workforce" because, well, the GOP is not so friendly with the labor movement.

It's the Senate, however, where things have taken a surprising turn: All returning Democrats have signed a letter to Reid calling for filibuster reform. That's surprising now, and would've been unthinkable a year ago. What they mean by filibuster reform isn't yet clear -- it's not ending the filibuster, but it could be as much as the full Merkley package, or as little as empowering Reid to negotiate with Minority Leader Mitch McConnell over cloture delays -- but either way, it puts the minority on notice that continued routinization of procedural obstruction won't be met with mere sighs from the majority, but with rule changes that might eventually deprive the minority of those tools. The letter may just be a warning shot, but it could turn into much more if Democrats feel the warning wasn't heeded.

Top Stories

Every returning Democratic Senator wants to reform the filibuster, reports Dan Friedman: "All Democratic senators returning next year have signed a letter to Senate Majority Leader Harry Reid, D-Nev., urging him to consider action to change long-sacrosanct filibuster rules. The letter, delivered this week, expresses general frustration with what Democrats consider unprecedented obstruction and asks Reid to take steps to end those abuses. While it does not urge a specific solution, Democrats said it demonstrates increased backing in the majority for a proposal, championed by Sen. Tom Udall, D-N.M., and others, weaken the minority’s ability to tie the Senate calendar into parliamentary knots. Among the chief revisions that Democrats say will likely be offered: Senators could not initiate a filibuster of a bill before it reaches the floor unless they first muster 40 votes for it, and they would have to remain on the floor to sustain it."

Chalk it up to Mitch McConnell, I argue: "[Democratic] unity stems from an unlikely source: Minority Leader Mitch McConnell, who has mounted more filibusters in the past two years than occurred in the ’50s and ’60s combined. Uncontroversial bills like an extension of unemployment benefits that passed 97-0 and food-safety legislation that passed with 73 votes frequently faced multiple filibusters and months of delay. The minority has been so relentless and indiscriminate in deploying the once-rare failsafe that the majority has finally decided to do something about it."

The 111th Congress has adjourned, report David Fahrenthold, Philip Rucker, and Felicia Sonmez: "A Congress that was dominated by Democrats passed more landmark legislation than any since the era of Lyndon B. Johnson's 'Great Society.' Congress approved an $814 billion economic stimulus, a massive health-care overhaul, and new regulations on Wall Street trading and consumer credit cards. The list grew longer during this month's frenetic lame-duck session: tax cuts, a nuclear arms treaty and a repeal of the 'don't ask, don't tell' policy on gays in the military. But the 111th Congress will also be remembered for endless filibuster threats, volcanic town hall meetings, and the rise of the tea party. All were symbols of a dissatisfaction that peaked on Nov. 2, with a Republican rout in the midterm elections."

A bill providing health benefit to 9/11 relief workers has finally passed Congress, reports Felicia Sonmez: "After a years-long battle and a bout of last-minute opposition by Senate Republicans, the House on Wednesday passed a bill that would provide $4.2 billion in compensation and long-term health-care benefits for first responders who became ill from working at Ground Zero in the wake of the Sept. 11, 2001, attacks, sending the measure on to President Obama for his signature. The bill passed Wednesday evening by a vote of 206 to 60 after House leaders had held open the vote for more than an hour, presumably for members who were still hustling to make their way over to the Capitol on the final day of the 111th Congress' lame-duck session. Missing Wednesday's vote were nearly 170 House members, 100 more than had been missing in action for the previous day's votes."

The 111th Congress' accomplishments are reflected inthe 112th's main goals, writes E.J. Dionne: "The new Republican House majority is devoted less to a bold agenda of its own than to repealing, scaling back or derailing the accomplishments of the outgoing majority. The fact that wiping out what they call 'Obamacare' is a unifying priority for the conservative newcomers is a backhanded compliment to those who enacted it: Yes, it was a big deal after all, and in the forthcoming debate, reform's supporters will get a second chance to make the case for what they did. Republicans also hope to undercut financial reform, giving the law's supporters the opportunity to explain more clearly why a financial system with loose rules becomes little more than a casino operated by people in much nicer suits than those worn by the average croupier."

Got tips, additions, or comments? E-mail me.

Indie pop interlude: First Rate People's "Girls' Night".

Still to come: Merrill Lynch spent two years selling itself toxic assets; Medicare is declining to use its own databases to police fraud; a bill to protect whistleblowers failed in the Senate; the US is challenging China at the WTO on wind power; and a cat is deeply confused by his own reflection.

Economy

Merrill Lynch sold itself toxic assets, report Jake Bernstein and Jesse Eisinger: "Two years before the financial crisis hit, Merrill Lynch confronted a serious problem. No one, not even the bank's own traders, wanted to buy the supposedly safe portions of the mortgage-backed securities Merrill was creating. Bank executives came up with a fix that had short-term benefits and long-term consequences. They formed a new group within Merrill, which took on the bank's money-losing securities. But how to get the group to accept deals that were otherwise unprofitable? They paid them...The group, created in 2006, accepted tens of billions of dollars of Merrill's Triple A-rated mortgage-backed assets, with disastrous results. The value of the securities fell to pennies on the dollar and helped to sink the iconic firm. Merrill was sold to Bank of America, which was in turn bailed out by taxpayers."

Economic growth beat projections in the third quarter: http://on.wsj.com/i4dkGt

Fannie and Freddie were central to creating the foreclosure crisis, report Zachary Goldfarb and Ariana Eunjung Cha: "Fannie and Freddie, the largest mortgage companies, shaped the practices being challenged in courtrooms around the country. They picked law firms that could foreclose fast and paid them based on how many foreclosures they could process. Speed was essential because delays cost the companies money - and, after they were taken over by the government two years ago, meant losses for taxpayers, too. Not only did the companies urge swift foreclosures, but in at least one case Fannie executives also greenlighted working with a firm that they knew firsthand had engaged in legally questionable practices, according to documents and interviews with lawyers and industry officials."

Greater consumer spending and business hiring is forming a positive feedback loop: http://on.wsj.com/emsl3E

Obama should be able to compromise with incoming Ways and Means chair David Camp, writes George Will: "His aim is 'fundamental' tax reform, understood the usual way - broadening the base (eliminating loopholes) to make lower rates possible. He would like a top rate of 25 percent - three points lower than Ronald Reagan achieved in 1986, with what proved to be perishable simplification...If Barack Obama is accurately reported to be considering serious tax simplification and lower rates, he will have an ally in Camp - up to a point. Serious arguments about taxes are never just about taxes. They are about government's proper size and purposes. Concerning that, Obama differs with Camp, who says: 'Washington doesn't have a revenue problem. It has a spending problem.'"

Classic comics interlude: Calvin & Hobbes strips about snowmen.

Health Care

Medicare isn't using its own records to stop fraud, report Mark Schoofs and Maurice Tamman: "There are plenty of reasons why Medicare often fails to stop questionable payments up front. To protect law-abiding doctors and hospitals--the vast majority--Medicare is required to pay nearly everybody within 30 days. Medicare says it is reluctant to suspend payments to providers who may have made honest mistakes, out of concern that beneficiaries might go without needed treatment. Law-enforcement agencies and Medicare contractors, overwhelmed by the sheer volume of Medicare fraud cases, can't investigate and prosecute them all. Sometimes, prosecutors and investigators ask Medicare to keep paying so as not to tip off targets of an investigation. But a central problem is that Medicare hasn't fully exploited its most valuable resource: its claims database, a computerized record of every claim submitted and every dollar paid out."

The ACLU is pushing the Center for Medicare and Medicaid Services to require Catholic hospitals perform abortions: http://wapo.st/gaT7bC

The EPA will offer testing for a water supply carcinogen, reports Lyndsey Layton: "The Environmental Protection Agency is suggesting that water utilities nationwide test their drinking water for hexavalent chromium, a probable carcinogen, after an independent survey released earlier this week found the chemical in tap water drawn from 31 cities. The EPA said Wednesday that it is issuing guidance to the utilities explaining how to test for the chemical but is not requiring tests at this time. The agency said it will also give technical help to the 31 cities identified in the survey - including Washington and Bethesda - so they can set up a monitoring and sampling procedure for hexavalent chromium, a chemical made famous by the film 'Erin Brockovich.'"

Domestic Policy

A bill to help whistleblowers has failed in the Senate, report Jeffrey Smith: "A bill giving federal employees expanded protections against retaliation for blowing the whistle on waste, fraud and abuse died in Congress on Wednesday night, after a 12-year lobbying effort won last-minute unanimous approval for it in the House but failed to gain similar approval under special voting rules in the Senate. A single unnamed senator put a hold on the bill, which had already passed the Senate by voice vote in a more controversial form, just before the chamber adjourned for the Christmas holiday. That decision denied the Obama administration - and many Republican supporters - a victory that accountability advocates have long sought."

Some municipalities are dealing with retiree benefits through bankruptcy: http://on.wsj.com/haBKjr

States have enacted dramatic education cuts, writes Robert Reich: "California has reduced K-12 aid to local school districts by billions of dollars and is cutting a variety of programs, including adult literacy instruction and help for high-needs students. Colorado has reduced public school spending in FY 2011 by $260 million, nearly a 5 percent decline from the previous year. The cut amounts to more than $400 per student. Georgia has cut state funding for K-12 education for FY 2011 by $403 million or 5.5 percent relative to FY 2010 levels. The cut has led the state’s board of education to exempt local school districts from class size requirements to reduce costs."

Adorable animals getting disoriented interlude: A kitten gets confused by his own reflection.

Energy

The US is challenging China at the WTO over wind power, reports Sewell Chan: "The Obama administration accused China on Wednesday of illegally subsidizing the production of wind power equipment and called for discussions at the World Trade Organization, the first step in a trade case sought by American steelworkers. It is the second time in less than four months that the administration has accused China of violating world trade rules. The move escalates the trade tensions between the world’s largest two economies over clean energy, a sector that the administration views as a technological frontier in which American companies are struggling to remain competitive. Washington is challenging a special government fund in China that awards grants to makers of wind power equipment."

The price of oil has finally recovered from the financial crisis, report Russell Gold and Carolyn Cui: "Rising demand for petroleum--notably from U.S. motorists and Chinese manufacturers--has helped push oil above $90 a barrel for the first time since the early days of the financial crisis. The recovery in oil prices is an encouraging sign of world growth, but the spike in crude, if unchecked, also could pose problems for consumers whose incomes remain pinched. Crude oil closed above $90 on the New York Mercantile Exchange on Wednesday for the first time since October 2008, after prices fell in the early months of the financial crisis and global recession. The price of crude had held above $80 for much of 2010, and crept up in recent weeks. Crude's rise is hitting motorists in the wallet. The average price for a gallon of gasoline reached $3 for the first time in two years."

China is near a coal shortage, reports Huang Jingjing: "A severe coal shortage has caused power supplies to factories and residential neighborhoods to be temporarily suspended across seven provinces and regions, as the nation's energy shortage worsens. Coal reserves have been emptied by a huge surge in power demand, prompted by a cold weather front that swept China last week, according to the State Grid Corporation, China National Radio (CNR) reported Sunday. In northwest Shaanxi Province, 14 major thermal power stations had only enough coal stocks for four days, with two others already empty. Due to this worrying state of affairs, many enterprises and residents in the province have received notice of impending power cuts, according to the local China Business View."

Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews, Mike Shepard, and Michelle Williams.

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Dec. 23, 2010